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Which of the following are steps in a capital investment financial analysis? A Estimate the project’s...

Which of the following are steps in a capital investment financial analysis?

A Estimate the project’s cash flows.
B Assess the project’s riskiness.
C Estimate the project cost of capital (discount rate).
D Measure the financial impact.
E All of the above
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Answer #1

Answer is Option E

All these are steps to financial analysis of a capital investment decision making.

Remember, when you get a proposal for project, you estimate the amount of cash flows - both inflows and outflows, you assess the volatility of these cash flows and estimate the riskiness of preject, followed by which you adjust the discount rate to capture the risk appropriately. Last you assess the impact the project would have on your financial statements and value of firm.

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